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IDC: Cloud To Create ‘Radical’ Shift For Outsourcers

IBM, HP and other ‘traditional’ outsourcing companies will have to rethink their business models in light of the impact of cloud services, says IDC

On by Matthew Broersma 0

Outsourcing giants such as IBM and HP are to be forced to adapt their business models to the expectations of flexibility and performance raised by the boom in cloud-based outsourcing, according to a new study by IDC.

The study, released on Friday, found that access to new delivery models, such as cloud-based services and software-as-a-service (SaaS), is becoming so important that it is set to create radical changes in the way other types of outsourcing operate.

Traditional outsourcers hit hardest

Those “radical” changes will particularly affect “traditional” outsourcers, IDC said, specifically citing as examples IBM, HP, CSC, Accenture, Wipro, TCS, Infosys, Capgemini and Fujitsu.

Broadly speaking, the shift will be from services based on human expertise to more automated cloud-based services that can deliver greater performance, IDC said.

“Perhaps the greatest lesson of the Great Recession is the need for companies to be much more adaptable to changes in the market,” said David Tapper, IDC vice president of Outsourcing and Offshore Services Market research, in a statement.

“This fundamental need is a major force driving considerable shifts in the outsourcing industry, shifts that not only involve provisioning more targeted and innovative solutions, but also involve the transformation of the outsourcing industry from a labour-centric model of service delivery to more asset-based services involving cloud-based outsourcing,” Tapper stated.

IDC said the outsourcers in question need to look more closely at how customers are adopting utility-based services, and will need to make “radical adjustments” to their delivery capabilities, partnership ecosystems, business models, and service offerings.

Identity shift

The impact of the cloud will oblige outsourcers to take a broader view of who they are and what they’re doing, IDC said.

“They will… need to extend their view of who they are and who they will be competing with, within and beyond the traditional market of IT and business process services,” IDC stated.

The recession is fuelling a shift in outsourced services toward the cloud, with one-tenth of IT outsourcing spending in 2010 set to have been spent on external cloud services, according to a report released by Gartner last month.

The survey found that 39 percent of respondents worldwide indicated they allocated IT budget to cloud computing as a key initiative for their organisation.

“This is yet another trend that indicates a shift in spending from traditional IT assets such as the data centre assets and a move towards assets that are accessed in the cloud,” stated Gartner research director Bob Igou at the time.

Cloud boom

The continued uptake of cloud computing within the enterprise is driving spending on server hardware, according to a report by research firm IDC. Server hardware revenue for public cloud computing is predicted to grow from $582 million in 2009 to $718 million in 2014, and the private cloud market set to grow from $2.6 billion to $5.7 billion over the same period.

Last month HP released a cloud-based mobile device management system for IT managers, handling smartphones, notebooks and other devices.

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